Article -62 Week 20 The Monkey In The Balance Sheet

Article -62 Week 20

The Monkey In The Balance Sheet

Born to live a life of lies : officially speaking! I am sure that we can have a more wholesome officialdom than this shallow one. I have had many discussions with wise experts on the issue of reflecting the bribes paid to government servants and kick-backs paid to individuals in private companies in the general course of business transactions in the books of account. My contention is to reflect them the way they actually are - not as incidental miscellaneous expenses of such monumental disproportions. Even though the Indian Court vindicates my stand, it is impossible enough a task to represent truthfully in the books - I've been strictly warned! Incentive, Bakshish, Kick-backs, Speed-money, Incidentals, Grease Money, Bribes, Inducements, and Sweeteners etc - are bad words in our account books!

Because the very act of giving bribes is against the law. Therefore, an entry to that effect stands illegitimate and punishable admission of culpability.  The Income Tax Authorities shall not admit this as an expense in the books that easily. There are no receipts, invoices or names in the transaction. You can not prove it to be bonafide in any case. If you show it as a miscellaneous expense, then the amount should not be eye-catching. The Service Tax authorities have no qualms on this issue, since they would slap a 10.2% Tax on these expenses of miscellaneous ledger heads.

So the pragmatic solution lies in cooking the books to show these expenses as some other direct expenses. It is not that tough to fabricate a lie. The other option of doing it truthfully with the spirit and idealism of a novice is akin to sticking your neck into the lion's mouth. Then the most obvious question that is cannonballed on to the pragmatist is : "Why did you pay bribe in the first place? Is that not a culpable crime? Your second right is not going to exonerate your first crime!"

That's a loaded cannonball! To simplify it further " Can we do business successfully in India without paying a bribe to Babus or Politicians ?"  The nation broods, while business goes on with heavily cooked books.

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Brgds

Capt Rath